Amazon reported a 14 percent jump in fourth-quarter sales, driven by holiday shopping and growth in its cloud computing unit. However, its shares fell nearly 11 percent during after-hours trading on Thursday, after the company announced plans to increase capital spending, including a projected US$ 200 billion investment in AI development, robotics, semiconductors, and satellites in 2026.
According to a report by Bloomberg, investors were concerned that “its colossal bet on artificial intelligence may not pay off in the long run.” But Amazon shows no signs of slowing down AI investments.
Andy Jassy, President and CEO of Amazon, said, “With strong demand for our existing offerings and opportunities in AI, chips, robotics, and low-earth orbit satellites, we plan to invest about US$ 200 billion in capital expenditures across Amazon in 2026. We anticipate these investments will generate strong long-term returns, though they will require careful management of cash flow and financing.”
In a press release, Amazon states that the company continues to expand its footprint in artificial intelligence, leveraging its cloud business and significant infrastructure investments to fuel long-term growth. According to its Q4 and full-year 2025 financial results, Amazon Web Services (AWS), the company’s cloud and AI platform, posted impressive gains, highlighting AI as a key growth driver.
In Q4 2025, AWS’s worldwide revenue increased by 12 percent, totaling US$ 213.4 billion and cash flow rose 24 percent year-over-year to US$ 39.5 billion, while full-year revenue reached US$ 127.1 billion, up 20 percent from 2024. AWS remains central to Amazon’s AI strategy, supporting enterprise cloud computing, machine learning workloads, and a growing suite of generative AI services as reported by Investing.com.
Amazon’s financial statements also reveal a US$ 50.7 billion increase in net purchases of property and equipment, largely attributed to AI and infrastructure investments. These expenditures, which contributed to a drop in free cash flow to US$ 11.2 billion, to support AI applications at scale.
Despite constraints on free cash flow, Amazon’s Q4 2025 operating cash flow climbed 20 percent year-over-year to US$ 139.5 billion, to fund capital-intensive AI initiatives. The company plans to continue financing its 2026 capital expenditures through a combination of operational cash generation and strategic financing, ensuring the sustained growth of its AI and cloud capabilities.
As AWS revenue continues to surge and capital investment ramps up, Amazon is positioning itself at the forefront of AI infrastructure and services, a move likely to have significant implications for enterprises and developers leveraging AI technologies worldwide.
Interestingly, the earnings report coincides with Amazon’s second round of mass layoffs in three months, affecting roughly 16,000 corporate employees. The company emphasized that the layoffs were aimed at streamlining organizational layers to speed operations and were not directly caused by AI initiatives, even as AI remains a key area of investment.